James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

Ailing Whitehaven a problem for Tinkler’s creditors

With the sale of the Patinack Farm racing operation unlikely to net Nathan Tinkler’s reported $200 million expectations, Nathan Tinkler’s creditors must be tempted to take control of Whitehaven Coal before it loses any more value.
Photo: Louie Douvis

Now comes the news that shares in Whitehaven Coal have hit a four-year low. Tinkler's stake in the company is his biggest asset but its value has fallen from about $760 million to $427 million.

The sale of Patinack Farm shouldn’t affect the share price of Whitehaven but it fell almost 3 per cent yesterday. Investors are justifiably spooked about the financial state of its largest shareholder.

The dip in the share price will also spook Tinkler's creditors who, he recently told the NSW Supreme Court, are owed $600 million.

Where are the assets?

Tinkler says he has $1.2 billion in assets against that but how he comes up with that figure is hard to understand. There's Patinack, there's the Whitehaven stake ... then there are a whole lot of undeveloped assets that may or may not be worth much.

If they're smart, Tinkler's creditors would know that he's got next to no chance of getting $200 million for Patinack Farm. He will be hoping that he can do as well as the Ingham family, who sold their racing outfit for $500 million back in 2008. That sale was, however, a perfect combination of the right buyer (the Dubai royal family) at the right time (just before the global financial crisis) with the right asset (Australia's best breeding and racing operation).

At this stage, Tinkler has none of those things and $50 million to $100 million is the best he can hope for.

That means the Whitehaven stake remains the best chance for Tinkler's creditors to recoup their money. But with the value of the stock falling, the creditors face a tough choice: do they grab control of the stake and sell it before Whitehaven falls further, or do they hold on and wait for a recovery?

The creditors haven't moved yet. Perhaps Tinkler can buy some more time yet.